Braze, Inc. Q4 FY2024 earnings

Braze closed fiscal 2024 with revenue of $131.0 million in the fourth quarter ended January 31, 2024, up 32.7% from a year earlier. Full-year revenue was $471.8 million, also up 32.7%. Gross profit rose 34.8% in the quarter to $88.0 million and 35.3% for the fiscal year to $324.3 million. Gross margin was 67.2% in the quarter, up 1.0 percentage point from the prior-year quarter, and 68.7% for the full year, up 1.3 points. Management attributed the full-year revenue gain mainly to subscription growth, with existing customers adding monthly active users, channels, committed entitlements and features, while new customers supplied the rest.

Profitability is still negative, but the losses are shrinking. The quarter's operating loss was $32.3 million, narrower than $36.5 million a year earlier, and the full-year operating loss was $144.7 million against $148.1 million. Operating margin improved 12.4 percentage points in the quarter to -24.7% and 11.0 points for the fiscal year to -30.7%. Net loss for the quarter was $28.3 million, narrower than the $33.5 million loss a year earlier. Diluted loss per share was $1.32 for the fiscal year, an improvement from $1.47.

Cash generation turned a corner. Operating cash flow was $3.8 million in the quarter and $6.9 million for the fiscal year, compared with negative $22.3 million in the prior fiscal year. Capital expenditures were $6.3 million in the quarter and $9.8 million for the year, down 36.8% from the prior fiscal year. Free cash flow, which Braze reports on a non-GAAP basis as operating cash flow less purchases of property and equipment and capitalized internal-use software costs, was negative $6.5 million for the fiscal year, an improvement from negative $39.0 million a year earlier.

Customer metrics show momentum and some pressure together. Braze ended the fiscal year with 2,044 customers, up from 1,770, and roughly 6.2 billion monthly active users, up from 4.8 billion. Customers with annual recurring revenue of $500,000 or more rose to 202 from 156. The trailing-twelve-month dollar-based net retention rate slipped to 117% from 124% for all customers, and to 120% from 126% for the larger accounts. Deferred revenue, current portion, stood at $204.3 million, up 23.0%, and remaining performance obligations were $639.2 million, up 40.3%.

The geographic mix keeps shifting. Revenue generated outside the United States was 43% of the fiscal 2024 total, up from 42% the prior year, and management named Europe and Asia-Pacific as expansion priorities. Seasonality cuts the other way on costs, since messaging volume and compute needs typically peak in the fourth quarter because of holiday activity, pushing cost of revenue higher in that period. Macroeconomic uncertainty, competition and changes in customer spending remain named risks. Contractual obligations are substantial, with non-cancelable purchase commitments of $255.1 million and operating lease obligations of $122.9 million, due primarily over the next three years. Braze says current cash resources should cover working capital needs for at least the next 12 months, even as a full valuation allowance stands against its deferred tax assets.

Growth remains the core of the story. Braze leans on a land-and-expand model, expanding within accounts as customers add channels, buy more products, or reach more end users, and pricing rises with messaging volume and the number of consumers reached. Management expects research and development and sales and marketing spending to increase in absolute dollars as the platform and global footprint grow. Those investments, plus public-company costs, keep pressure on profitability even as margins improve. Deferred revenue remains a large source of operating cash, since subscriptions are generally billed annually in advance.